Government Will Reform Finland’s Gambling System, What Will the transition from Veikkaus’ Monopoly Mean for Finnish Sports

June 21, 2023 | Government

The new government opens the gambling market with a license model. Sports operators connected to betting funds are cautiously optimistic about the change.

FINLAND June 16, 2023) — The government will reform Finland’s gambling system, opening it up to competition with a license model no later than January 1, 2026, the government program states, according to information obtained by Iltalehti.

The transition from Veikkaus’ monopoly to the fact that foreign betting companies are also allowed to legally operate in Finland will change the financing of elite sports. According to the most enthusiastic guesses, a gold mine is waiting around the corner.

The details of the license system are not yet clear, but a similar change took place in Sweden in 2019.

Economist Klaus Kultti says that in the western neighbor, the new income distribution brought new money to some sports, but there were also losers.

– When Veikkaus grants licenses, the license holder is allowed to advertise. What they direct their advertising to is based on market conditions. Where they think they can get the best visibility, that’s where they will definitely direct their money, Kultti reasons.

According to the Finnish Social Welfare Association (Soste), after the change, money was spent on advertising in Sweden at least 15 times compared to Finland.

It can certainly be assumed that even in Finland, even more money will be spent on appeal advertising from 2026 onwards.

Perhaps the most visible example in the field of sports in the western neighbor is the 12-year cooperation agreement signed by the football league Allsvenskan with a betting company headquartered in Malta.

The value of the contract, which multiplied the league’s income, was 170 million euros according to the exchange rate at the time.

In addition to the series, individual clubs and athletes have the opportunity to make lucrative deals with gambling companies. In the 2022–23 season, eight clubs in the Premier League wore the betting company’s logo on their shirts. The figure shows that top sports are seen as a very attractive form of advertising from the point of view of betting companies.

In any case, the Premier League attracts money, but in Finland the discussion shifts more to whether the introduction of the licensing system could save sports and clubs for which funding has been tight.

Finnish sports have long relied on funds distributed by Veikkaus. The funding model will change starting next year, when Veikkaus’ funds will no longer directly go to the beneficiary organizations, but the money will be distributed through the state budget.

The arrival of the license system brings yet another angle to future prospects.

– Change is always an opportunity for all operators. Both for Veikkaus and the Päsäpalloliito. Time will tell where it will lead, Ari Mononen , president of the Päsäpalloliitto , reflects on the license issue.

– In the coming years, the financing of sports will be in transition. Let’s think about how state aid is distributed to sports organizations and how social and economic development is going. If we look at the financing of the public sector, we are in quite challenging times. Yes, here all operators have to think about how to secure their future.

In addition to the baseball association, Suomen Hippos, the central organization of the horse industry, enjoys significant support from betting funds. At Ravileir, we are now working hard to find out and anticipate what is to come.

– We see opportunities in this whole. Horse playing is very international, and different countries play with each other. We do believe that this gaming market change will bring a positive outlook, Hippos CEO Minna Mäenpää trusts.

Benefit or harm?

In Klaus Kult’s opinion, Veikkaus’ operations will face a healthy test with the reforms.

If something happens, it is an indication that the money has previously been distributed using something other than a market mechanism. Economists basically have a fairly benign view of how the market mechanism works, says Kultti.

Veikkaus has not hidden the fact that the reform is also pleasing to them, because the company has lost its position in online gaming. A harder playing volume could also benefit Veikkaus.

The government, on the other hand, justifies the license system by reducing the disadvantages of gambling and increasing supervision.

However, in a blog post published in February by THL’s special researcher Jani Selini and special expert Tomi Rouka , it is suggested that the direction would be the opposite.

– As the number of players offering gambling increases, and with that, as the number of advertising and game products increases, gambling by Finns would very likely increase as well. At the same time, gambling disadvantages would also inevitably increase.

In Sweden, efforts have also been made to emphasize intervention in problem gambling. The disadvantages of gambling are still significant even there, even though there are various methods used to try to eradicate the disadvantages.

According to data published by the Swedish Institute of Public Health (Folkhälsomyndigheten) this spring, among boys aged 18-19, 14 percent have some degree of gambling problem.

Finnish sports operators also have to do this ethical reflection when betting money becomes available from new channels.

By: Sami Pilvinen

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SOURCE: Iltalehti.